United States v. Lashawn Duruisseau

Case: 18-30815 Document: 00515235375 Page: 1 Date Filed: 12/13/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
December 13, 2019
No. 18-30815
Lyle W. Cayce
Clerk
UNITED STATES OF AMERICA,
Plaintiff - Appellee
v.
DEION A. DURUISSEAU; HAROLD L. LEE,
Defendants – Appellants
______________________________________________
Consolidated with 18-30822
UNITED STATES OF AMERICA,
Plaintiff - Appellee
v.
LASHAWN A. DURUISSEAU,
Defendant – Appellant
Appeals from the United States District Court
for the Western District of Louisiana
USDC No. 1:12-CR-320
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Before JONES, SMITH, and HAYNES, Circuit Judges.
PER CURIAM:*
Deion A. Duruisseau, Lashawn A. Duruisseau, and Harold L. Lee
(collectively, “Appellants”) appeal their convictions of conspiracy to commit
bank fraud and fraud against a financial institution on several grounds. For
the reasons explained below, we AFFIRM the convictions. However, we
conclude that the loss calculation method used to determine the sentencing
ranges was improper, so we VACATE the sentences and REMAND for
resentencing.
I. Background
This case involves a married couple and a title attorney who were
convicted of conspiracy to commit bank fraud and fraud against a financial
institution. Deion and Lashawn Duruisseau ran Billionaire Properties
(“Billionaire”), a real-estate development company that ostensibly sought to
flip homes—that is, the Duruisseaus claimed to purchase properties, remodel
them, and sell them at a higher price. The Duruisseaus entered into a
partnership with Harold Lee, their title attorney: Lee funded property
purchases, served as a closing agent for sales, and had undisclosed financial
interests in the properties.
The Duruisseaus solicited buyers—family and friends from church—to
purchase investment properties even though the buyers lacked the funds for a
down payment. When homes were purchased, the buyers did not actually
provide money for the purchase. Instead, the Duruisseaus paid the down
payments at closing, leaving the buyers responsible only for mortgage
payments. Some buyers purchased several homes under this scheme: Andre
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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and Marilyn Long, for example, purchased twenty-four homes (and quickly lost
them after defaulting on the payments).
To obtain a mortgage, the parties to the transaction must file certain
forms. HUD-1 Settlement Statements are forms that require specified
information to be disclosed to the lender (here, Wells Fargo or Wachovia Bank).
Wells Fargo’s form required that the seller pay no more than two percent of
the buyer’s closing costs and specified that there could be no cash credits to the
buyer. Wachovia’s form required that the closing agent disclose refunds, repair
allowances, the seller’s payment of buyer’s fees, or similar concessions.
The HUD-1 forms submitted by the Duruisseaus’ buyers contained
several misrepresentations. The buyers represented that they provided cash
at closing even though they did not. Andre Long misrepresented his assets
under Deion’s direction. Further, the Duruisseaus stated that they were owed
tens of thousands of dollars for repairs done on certain homes even though
those repairs were actually not completed.
At closings, Lee signed the forms in his capacity as settlement agent. 1
The Duruisseaus also signed the forms, indicating that they were the
properties’ sellers.
Based on these facts, criminal charges arose. A grand jury initially
returned an indictment charging the Duruisseaus with one count of attempted
bank fraud. The grand jury then returned a superseding indictment, which
added a charge of false statements to a bank. Then, on February 27, 2014, the
grand jury returned a second superseding indictment, which charged the
Duruisseaus and Lee with: Count One – conspiracy to commit bank fraud
1Lee was not the closing agent for all of the Duruisseaus’ property sales. For example,
while Lee was the closing agent for sales involving the Longs (a couple the Duruisseaus knew
from church), Lee did not act as the closing agent for the Duruisseaus’ sales involving the
Akinkugbes (also friends from church).
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under 18 U.S.C. § 1349, Count Two – bank fraud against Well Fargo under 18
U.S.C. § 1344, and Count Three – bank fraud against Wachovia under 18
U.S.C. § 1344. It also charged the Duruisseaus alone with Count Four –
making a false statement to Southern Heritage Bank under 18 U.S.C. § 1014.
Appellants filed two pretrial motions for bills of particulars. The district
court granted their motion in part as to Count One, requiring the Government
to provide particulars as to (1) all the bank transactions that were part of the
conspiracy (and with which Lee was involved); and (2) the dates, times, and
places of the conspiracy and the identities of the named co-conspirators. The
court also granted Appellants’ motion as to Count Two, requiring that the
Government (1) identify all of the fraudulent real estate transactions,
(2) specify which fraudulent real estate transactions involved fraud committed
by Lee, (3) designate which specific documents contained false or misleading
statements for each transaction, and (4) provide the dates and places of the
fraudulent transactions.
After a jury trial, Appellants moved for a judgment of acquittal, which
the district court granted as to Count Four of the indictment. Counts One,
Two, and Three were submitted to the jury, and the jury returned a verdict of
guilty for all three Appellants on those counts.
Appellants filed a post-trial motion for a judgment of acquittal, which
the district court granted as to Count Three because the Government had
failed to offer proof that Wachovia Mortgage Corporation was insured by the
Federal Deposit Insurance Corporation (“FDIC”), which was required to be a
“financial institution” for purposes of the bank-fraud statute. The court denied
the motion with respect to Counts One and Two.
Before sentencing, Appellants filed objections to their presentence
investigation reports (“PSRs”), including objections to the loss calculations,
which affect the offense level used to calculate a defendant’s sentencing
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guidelines range. The district court held sentencing hearings for each
appellant, and it overruled their objections to the loss calculations and adopted
the methods used in the PSRs. Ultimately, Deion was sentenced to 144
months’ concurrent imprisonment, restitution, and a fine. Lee was sentenced
to sixty months’ concurrent imprisonment, restitution, and a fine. Lashawn
was sentenced to a day of imprisonment, supervised release conditions
including fifty-two weekends in jail, restitution, and a fine.
Appellants now appeal their convictions on several grounds.
II. Discussion
A. Sufficiency of the Evidence to Support Lashawn’s Conspiracy
Conviction
Lashawn contends that the Government did not proffer sufficient
evidence to support an inference that she knowingly assisted a fraudulent
scheme. We review the district court’s denial of a motion for a judgment of
acquittal de novo but remain “highly deferential to the verdict.” United States
v. Velasquez, 881 F.3d 314, 328 (5th Cir. 2018) (internal quotation marks
omitted). We resolve any credibility determinations, inferences, and conflicts
in the evidence in favor of the verdict. Id. at 328–29. We therefore uphold the
conviction if “any rational trier of fact could have found the essential elements
of the crime beyond a reasonable doubt.” United States v. Imo, 739 F.3d 226,
235 (5th Cir. 2014) (per curiam) (internal quotation marks omitted).
To support a conspiracy conviction under 18 U.S.C. § 1349, the factfinder
must determine, beyond a reasonable doubt, “(1) [that] two or more persons
made an agreement to commit . . . fraud; (2) that the defendant knew the
unlawful purpose of the agreement; and (3) that the defendant joined in the
agreement willfully, that is, with the intent to further the unlawful purpose.”
United States v. Eghobor, 812 F.3d 352, 362 (5th Cir. 2015) (internal quotation
marks omitted).
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Our inquiry centers on whether sufficient evidence existed to support an
inference that Lashawn knowingly assisted in the fraudulent scheme. The
mere existence of a “family relationship or other type[] of close association”
does not prove a conspiracy. United States v. White, 569 F.2d 263, 268 (5th
Cir. 1978). Similarly, a defendant who provides leadership for a company may
not be convicted simply because the defendant “should have known” that some
employees under their oversight were committing fraud. United States v.
Ganji, 880 F.3d 760, 775–76 (5th Cir. 2018) (emphasis removed). We agree,
therefore, that Lashawn’s familial relationship with Deion would not support
a conviction. On the other hand, direct evidence of involvement in a conspiracy
is not necessary, and a jury may base a conviction on exclusively circumstantial
evidence. See Nye & Nissen v. United States, 336 U.S. 613, 619 (1949).
Here, Lashawn signed Billionaire’s articles of organization and
identified herself as one of only two members owning the LLC. Then she
prepared, signed, and filed Billionaire’s annual reports. Moreover, an
accountant who prepared personal tax returns for the Duruisseaus and
corporate tax returns for Billionaire testified that Deion and Lashawn were
“equal partners” and shareholders for Billionaire. At times, the accountant
communicated solely with Lashawn, who was “knowledgeable” about
Billionaire, to obtain information needed for tax returns. In addition, Agent
Pamela McCarthy, who interviewed Lee as part of the investigation, testified
that Lee said Lashawn “did in fact play a role” in the scheme, “handled the
paperwork,” and “was knowledgeable” about Billionaire’s business of buying
and selling real estate. To be sure, the evidence on this point was not
overwhelming, and contradictory evidence existed. For example, at trial, Lee
testified that he never saw Lashawn handle paperwork. But we accept the
jury’s credibility determinations and reasonable inferences. See Imo, 739 F.3d
at 235.
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Resolving inferences in favor of the verdict, the evidence supports a
determination that Lashawn handled some financial paperwork for, was
knowledgeable about, and was a part owner of Billionaire. A reasonable juror
could draw the inference that a person who co-owns and prepares financial
documents for a company would be aware of financial documents showing that
the company was paid for home repairs (and would be aware that the company
never actually completed the repairs). A reasonable juror could then conclude
that a business’s co-owner who is aware that the company is receiving money
for never-completed repairs also knew that a fraudulent scheme was
underway.
This case is distinguishable from the “should have known” theory we
rejected in Ganji. There, we concluded that a person who owned a home health
agency could not be convicted on a theory that the nature of her position meant
that she should have known that nurses and medical directors were certifying
home health treatment for ineligible patients. Ganji, 880 F.3d at 776. We
reasoned that the defendant did not participate in the day-to-day processing of
the forms, had no medical training, and received no compensation beyond her
salary. Id. at 776–77.
Here, in contrast, Lashawn was not a spouse distanced from the day-to-
day operations of her husband’s business. She was a member of the business
and involved in its finances. As one of only two members of Billionaire, she
had a direct financial stake in the scheme. Further, Billionaire’s small
organizational structure suggests that each of the two members would be
involved in the details of the company’s transactions in a way that a partial
owner of a much larger company may not. Most significantly, the
misrepresentations should have been apparent to Lashawn from the face of the
documents. A reasonable person handling company funds would know if they
had paid the down payment on a home or if their company had completed any
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identified repairs on a home. This stands in contrast to Ganji, where a person
whose sole role was reviewing financial documents by themselves would be
ignorant of whether a patient’s condition warranted certification for home
health services.
In sum, enough evidence existed for a reasonable juror to find that
Lashawn knew of Billionaire’s unlawful purpose. Accordingly, we affirm that
sufficient evidence existed to support her conspiracy conviction.
B. “Knowingly” Jury Instruction
We next consider whether the district court erred when it declined to
instruct the jury that it must find that Appellants knew the
misrepresentations were both false and material. A district court retains
“substantial latitude” in formulating jury charges, and its “failure to give a
proposed jury instruction is reviewed for abuse of discretion, subject to
harmless error review.” United States v. Jones, 664 F.3d 966, 978 (5th Cir.
2011). However, if the objection to the jury instruction “hinges on an issue of
statutory construction, our review is de novo.” United States v. Brooks, 681
F.3d 678, 697 (5th Cir. 2012) (internal quotation marks and brackets omitted).
The Supreme Court recently decided Rehaif v. United States, which
concerned the scope of the word “knowingly” in a federal statute prohibiting
certain individuals from possessing firearms. 139 S. Ct. 2191, 2194 (2019). At
issue were two statutes: 18 U.S.C. § 922(g), which makes it unlawful for, among
others, an alien who is illegally or unlawfully in the United States to possess a
firearm; and 18 U.S.C. § 924(a)(2), which provides that a person who knowingly
violates § 922(g) may be fined or imprisoned for up to ten years. Rehaif, 139
S. Ct. at 2194. The Court determined that the Government must prove that a
defendant knew both “that he engaged in the relevant conduct . . . and also
that he fell within the relevant status . . . .” Id. The Court noted that a
longstanding presumption exists that “Congress intends to require a defendant
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to possess a culpable mental state regarding each of the statutory elements
that criminalize otherwise innocent conduct.” Id. at 2195 (internal quotation
marks omitted). A defendant who did not know that his or her presence in the
United States was unlawful could not, therefore, have the required guilty state
of mind. Id. at 2198.
The statute at issue here—18 U.S.C. § 1344—provides that anyone who
“knowingly executes . . . a scheme or artifice . . . (1) to defraud a financial
institution; or (2) to obtain any of the moneys . . . of[] a financial institution, by
means of false or fraudulent pretenses” shall be fined or imprisoned. The
Supreme Court has presumed that Congress intended to incorporate the well
settled, common-law meaning of fraud into fraud statutes and therefore reads
a materiality requirement into the statutes. Neder v. United States, 527 U.S.
1, 23 (1999).
According to Appellants, the district court improperly failed to instruct
the jury that it must find that Appellants knew their representations were both
false and material. They raised this argument before our court on the eve of
oral argument, so it is waived for failure to timely assert it. See Cinel v.
Connick, 15 F.3d 1338, 1345 (5th Cir. 1994). Even if the argument were not
waived, however, we note that the Court did not announce a broad, sweeping
approach in Rehaif. Instead, it was looking at the issue of an otherwise
innocent act—possessing a firearm—made a crime because of the status of the
individual in possession. See 139 S.Ct at 2197. The Court required that the
person know the particular status since that is what makes his act illegal. Id.
Here, while a misrepresentation must be material to be actionable under
§ 1344, the text of the statute says nothing about materiality, and making
intentional misrepresentations to a financial institution is hardly “innocent
conduct.” Thus, we conclude that Rehaif does not alter the relevant law
applicable to this statute, and the district court did not err in its instruction.
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C. Sufficiency of the Indictment
Appellants assert that Count One of the indictment did not describe their
offense conduct with sufficient particularity and, accordingly, that the
indictment did not conform to constitutional standards. When, as here, the
defendants objected below, we review the sufficiency of the indictment de novo.
United States v. Hoover, 467 F.3d 496, 498 (5th Cir. 2006).
An indictment’s basic function “is to inform a defendant of the charge
against him.” Id. at 499. To be sufficient, an indictment “must conform to
minimal constitutional standards[,]” meaning it must “allege[] every element
of the crime charged and in such a way as to enable the accused to prepare his
defense and to allow the accused to invoke the double jeopardy clause in a
subsequent proceeding.” Id.
Here, the indictment conformed to minimal constitutional standards.
Count One of the second superseding indictment informed Appellants of the
charge against them, namely conspiracy to commit bank and wire fraud in
violation of 18 U.S.C. § 1349, and it specified the underlying substantive
offenses. It also identified the broad timeframe of the offense conduct. The
indictment described the manner and means of the conspiracy and specifically
alleged that the Duruisseaus found investors to participate in home-sale
closings and made false statements on loan applications and HUD-1 forms. We
have held before that an indictment may be “broad, describing many instances
of wire and mail fraud by the defendants” without being “vague or indefinite.”
United States v. Simpson, 741 F.3d 539, 548 (5th Cir. 2014).
Further, Appellants’ contention that the indictment was not specific
enough to allow them to prepare a defense is unavailing. An indictment must
provide, at a minimum, “a plain concise statement of the essential facts
constituting the offenses charged,” and it did so here. United States v. Gordon,
780 F.2d 1165, 1172 (5th Cir. 1986). However, the indictment need not
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describe the facts of the offense in detail. Notably, “a defendant’s
constitutional right to know the offense with which he is charged must be
distinguished from a defendant’s need to know the evidentiary details
establishing the facts of such offense, which can be provided through a motion
for bill of particulars.” Id. Indeed, Appellants obtained a bill of particulars,
which provided more precise information about the alleged conspiracy.
In sum, we conclude that Count One of the indictment put Appellants on
notice of the charges against them, allowed them to prepare a defense, and
contained enough information for them to invoke the double jeopardy clause in
a subsequent proceeding. See Hoover, 467 F.3d at 499. It accordingly
conformed to minimal constitutional standards.
D. Constructive Amendment
Appellants next argue that the district court constructively amended
Counts One and Two of the indictment. Once a defendant has been charged,
only a grand jury may broaden or alter the indictment. United States v.
Thompson, 647 F.3d 180, 184 (5th Cir. 2011). “A constructive amendment
occurs when the court permits the defendant to be convicted upon a factual
basis that effectively modifies an essential element of the offense charged or
upon a materially different theory or set of facts than that which the defendant
was charged.” United States v. Chaker, 820 F.3d 204, 210 (5th Cir. 2016)
(internal quotation marks and brackets omitted). The key question is whether
the jury charge broadened the indictment. United States v. Griffin, 800 F.3d
198, 202 (5th Cir. 2015).
If a constructive amendment argument is properly preserved by timely
raising it below, we review the issue de novo; if not, we review for plain error.
Chaker, 820 F.3d at 210, 213. Under plain error review, we will reverse only
if there is a clear and obvious error that affects a defendant’s substantial rights
and “seriously affects the fairness, integrity, or public reputation of judicial
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proceedings.” United States v. Stanford, 805 F.3d 557, 566 (5th Cir. 2015)
(brackets omitted) (quoting United States v. Olano, 507 U.S. 725, 735–36
(1993)). The parties do not dispute that the constructive amendment claim for
Count Two was not preserved. Lee asserts, however, that he properly
preserved his claim for Count One because he objected to the indictment’s
breadth. Arguing that an indictment is overbroad is distinct from (and perhaps
in conflict with) asserting that the jury charge allowed a conviction under a
broader range of facts than the comparatively narrow indictment. See Griffin,
800 F.3d at 202 (“[T]he key inquiry is whether the jury charge broadened the
indictment; if it only narrowed the indictment, no constructive amendment
occurred.”). We accordingly determine that Appellants did not raise a
constructive amendment claim below and review for plain error.
As to Count One, we find no constructive amendment. According to
Appellants, the Government proffered a fraud theory based on underwriting
guidelines that was outside the scope of the indictment. However, the
Government responds that the underwriting guidelines were meant to show
that the misstatements were material. The use of underwriting guidelines did
not invite the jury to convict Appellants based on a theory not charged in the
indictment. Moreover, the court’s jury charge made clear that Appellants were
“not here on trial for any act, conduct, or offense not alleged in the superseding
indictment” and that “[n]o one in this case is charged with any violations of law
specifically regarding the preparation of the HUD-1 outside of the allegations
in the superseding indictment.”
As to Count Two, Appellants argue that the indictment alleged fraud
related to one specific property at 72 Louisiana Avenue. At trial, the
Government presented evidence about several additional properties, which
properly pertained to the conspiracy charge. The court’s charge for Count Two
did not specify that 72 Louisiana Avenue was the only property in question.
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A limiting instruction regarding properties other than 72 Louisiana
Avenue would have been useful when the court charged the jury as to Count
Two. However, our review here is limited to plain error, and any error here
did not seriously affect the fairness, integrity, or public reputation of judicial
proceedings. See Stanford, 805 F.3d at 566. The alleged frauds related to
properties other than 72 Louisiana Avenue “could have properly been charged
in the indictment and [are] prohibited by statute.” United States v. Daniels,
252 F.3d 411, 414 (5th Cir. 2001). The evidence of frauds at other properties
related to conduct charged in Count One, so Appellants were “on notice” that
they would be required to defend against such allegations. Stanford, 805 F.3d
at 566. Notably, the Government presented evidence about 72 Louisiana
Avenue at trial, so Appellants cannot show that the jury actually found them
guilty based on a broader theory than that charged in the indictment. We
accordingly determine that any error did not seriously affect the fairness,
integrity, or public reputation of judicial proceedings.
E. Unanimity Instruction for Count Two
Appellants claim that an element of bank fraud is a materially false
statement and that the jury must therefore unanimously agree as to which
particular statement was false. Thus, they assert that the jury should have
been instructed that it must unanimously agree that a misrepresentation
occurred with respect to the specific 72 Louisiana Avenue transaction.
“[A] jury in a federal criminal case cannot convict unless it unanimously
finds that the Government has proved each element.” Richardson v. United
States, 526 U.S. 813, 817 (1999). “[T]he jury must agree unanimously and
separately” for each element, but it “need not always decide unanimously
which of several possible sets of underlying brute facts make up a particular
element.” Id. at 817–19. A preserved objection to the district court’s refusal to
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grant a requested jury instruction is reviewed for abuse of discretion. 2 United
States v. Sheridan, 838 F.3d 671, 672 (5th Cir. 2016).
We have stated before that under the wire-fraud statute, “there is no
need to instruct a jury that it needs to be unanimous as to a particular false
statement within a given wire” because that statute criminalizes “not a
particular false statement within a wire, but rather each particular wire that
contained a false statement.” United States v. Nanda, 867 F.3d 522, 529 (5th
Cir. 2017). Similarly, § 1344 criminalizes executing a fraudulent “scheme or
artifice” and does not separately criminalize each false statement used in
furtherance thereof. Thus, charges brought under the bank- or wire-fraud
statutes are distinguishable from the perjury charges that were at issue in
United States v. Holley, where we required a particular unanimity instruction
for charges brought under a statute criminalizing particular false statements.
942 F.2d 916, 927 (5th Cir. 1991).
Significantly, the indictment in Holley alleged multiple theories of
liability under a single count. Id. But here, Count Two of the indictment
alleges only one offense, so this is not a situation where the indictment allowed
a jury to find the defendants guilty under multiple theories of liability. For
these reasons, we hold that the district court did not abuse its discretion in
declining to give a particular unanimity instruction.
F. Impact of Count Three’s Reversal on Count One
Conspiracy and the underlying substantive offense are distinct crimes,
so an acquittal on one charge does not require an acquittal on the other. United
2 The Government argues that Appellants failed to preserve this argument. However,
even if Appellants’ objection was not identical to the theory asserted here, their unanimity-
of-theory objection was sufficient to “give the district court the opportunity to address the
gravamen of the argument presented on appeal.” United States v. Nesmith, 866 F.3d 677,
679 (5th Cir. 2017) (internal quotation marks omitted). We therefore determine that the
claim was preserved.
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States v. Romeros, 600 F.2d 1104, 1105 (5th Cir. 1979). “It is well established
that acquittal on the substantive count does not foreclose prosecution and
conviction for a related conspiracy” as long as the conspiracy conviction is
supported by the evidence. Id. “[A]n alternative-theory error—i.e., where a
jury rendering a general verdict was instructed on alternative theories of guilt
and may have relied on an invalid theory—is subject to harmless-error analysis
so long as the error at issue does not categorically vitiate all the jury’s
findings.” United States v. Skilling, 638 F.3d 480, 481 (5th Cir. 2011) (quoting
Hedgpeth v. Pulido, 555 U.S. 57, 61 (2008) (per curiam)) (internal quotation
marks and brackets omitted).
Here, the district court reversed the convictions under Count Three after
determining that the Government failed to put forward evidence showing that
Wachovia was FDIC insured. According to Appellants, their convictions under
Count One should also be reversed. Specifically, they argue that the district
court allowed the jury to base their conspiracy convictions on the substantive
offense underlying Count Three, which would taint the convictions.
The jury was “properly instructed as to the law”; Appellants’ argument
is one challenging the “insufficiency of proof”—namely, that the Government
did not prove that Wachovia was a financial institution. Griffin v. United
States, 502 U.S. 46, 58–59 (1991). However, we will not “negate a verdict”
simply because there is a chance “that the jury convicted on a ground that was
not supported by adequate evidence when there existed alternative grounds
for which the evidence was sufficient.” Id. at 59–60. The Government
presented sufficient evidence as to Count Two, as well as additional evidence
of the conspiracy. Putting the Wachovia transactions aside, adequate evidence
existed to support a conviction on Count One. Therefore, the reversal of Count
Three does not necessitate the reversal of Count One.
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G. Witness Testimony Related to Count Four
“Evidence is relevant if: (a) it has any tendency to make a fact more or
less probable than it would be without the evidence; and (b) the fact is of
consequence in determining the action.” FED. R. EVID. 401. Relevant evidence
is admissible unless otherwise precluded by the Rules of Evidence. Id. R. 402;
Huddleston v. United States, 485 U.S. 681, 687 (1988). A court may exclude
relevant evidence if the risk of unfair prejudice or misleading the jury, among
other things, “substantially outweigh[s]” its probative value. FED. R. EVID.
403. We review a district court’s evidentiary rulings for abuse of discretion.
United States v. Tuma, 738 F.3d 681, 687 (5th Cir. 2013). If an evidentiary
ruling was in error, we then subject the ruling to harmless-error analysis and
consider whether the error “affected the defendant[s’] substantial rights.” Id.
at 687–88.
Here, after the court granted the motion for acquittal as to Count Four,
Appellants objected to the admission of testimony and exhibits related to
Count Four into evidence. The court sustained the objection as to the exhibits
but overruled it as to the testimony. Lashawn argues that all testimony
related to Count Four should have also been excluded because it was probative
only as to Count Four and had a prejudicial impact. However, the testimony
at issue was relevant to establishing Lashawn’s involvement with Billionaire.
It was probative of her involvement in the overall scheme and relevant to the
conspiracy charged in Count One. A person may be convicted of conspiracy if
she acted in furtherance of the conspiracy, even if the person is not shown to
have directly participated in an underlying substantive offense. See Pinkerton
v. United States, 328 U.S. 640, 646–47 (1946). Therefore, even if the
Government failed to prove Count Four, evidence of Lashawn’s involvement in
the scheme could be admissible as to Count One. We thus conclude that the
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district court did not abuse its discretion in declining to strike all testimony
related to Count Four.
H. Statute of Limitations
Though the default federal statute of limitations is five years, offenses
involving “financial institutions” have a limitations period of ten years. 18
U.S.C. §§ 3282, 3293. Appellants argue that because the Government failed to
show that Wachovia was a financial institution, the correct limitations period
should have been five years and the jury should not have been allowed to
consider any Wachovia-related conduct to support a conspiracy conviction.
This was not raised below, and defendants ordinarily cannot raise a statute-
of-limitations bar for the first time on appeal. Musacchio v. United States, 136
S. Ct. 709, 716–17 (2016). Appellants appear to argue that because their
motion for acquittal at trial was denied, they had no opportunity to timely
assert their argument. But nothing explains why they were unable to raise
this issue in their post-trial motion for acquittal. In sum, Appellants failed to
raise a statute-of-limitations argument below and cannot do so now.
I. Cumulative Error
Appellants claim that we should reverse for cumulative error. We may
reverse for cumulative error “only when errors so fatally infect the trial that
they violated the trial’s fundamental fairness.” United States v. Delgado, 672
F.3d 320, 344 (5th Cir. 2012) (en banc) (internal quotation marks omitted).
This is not an “unusual case in which synergistic or repetitive error violate[d]
the defendant[s’] constitutional right to a fair trial.” Id. In fact, we have
identified only one potential error that occurred during the trial: the district
court should have specified in its jury instruction that Count Two referred only
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to 72 Louisiana Avenue. 3 We do not find that any litany of errors undermined
the trial’s fundamental fairness, and so we decline to reverse on this ground.
J. Loss Calculation
We review the district court’s application of the U.S. Sentencing
Guidelines de novo and its findings of fact at sentencing for clear error. United
States v. Hinojosa, 749 F.3d 407, 411 (5th Cir. 2014). “Issues related to a
defendant’s sentence are reviewed for reasonableness” using a two-step
process: we first “ensure that the district court committed no significant
procedural error” and then “consider the substantive reasonableness of the
sentence imposed.” United States v. Claiborne, 676 F.3d 434, 437 (5th Cir.
2012) (per curiam) (brackets and internal quotation marks omitted). When
determining loss, the district court need not achieve “absolute certainty.”
United States v. Morrison, 713 F.3d 271, 279 (5th Cir. 2013). It therefore “need
only make a reasonable estimate of the loss.” Id. (quoting U.S.S.G. § 2B1.1
app. 3(C)). Because the district court “is in a unique position to assess the
evidence and estimate the loss,” the sentencing judge’s determination “is
entitled to appropriate deference.” Morrison, 713 F.3d at 279 (quoting U.S.S.G.
§ 2B1.1 app. 3(C)).
The district court adopted the recommendations in Appellants’ PSRs
that loss be calculated by adding together the down payments for each transfer
of property. The PSRs recommended this method of calculation because the
down payments were a “common thread” throughout the property transfers,
and the probation officer concluded that the typical method—loan value minus
payments toward the principal—was unfeasible. Specifically, this case
diverges from typical bank fraud cases because Appellants did not falsely apply
for loans in their own name but instead obtained loans in others’ names, which
3However, we also determined that any error there did not amount to plain error. See
Section II.D., supra.
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left the buyers with unmanageable debt. Appellants argue that calculating
loss based on down payments had no logical connection to actual or intended
loss because the calculation was based on payments made to the lenders and
not money taken from victims. We agree.
Although there are situations where a net-loss calculation “may not
provide the most fair loss assessment,” when real property is involved, actual
loss (usually, net loss) is likely to be the appropriate method of calculation. See
United States v. Goss, 549 F.3d 1013, 1017–18 (5th Cir. 2008). Under the
Sentencing Guidelines, actual loss means “reasonably foreseeable pecuniary
harm,” which is “harm that the defendant knew or, under the circumstances,
reasonably should have known, was a potential result of the offense.” U.S.S.G.
§ 2B1.1 cmt. 3(A)(i),(iv). In this case, we see no reason why the district court
could not determine actual loss to the banks by a traditional net-loss
calculation—that is, the total of the amounts loaned but not recouped. The
district court stated that some lenders were unable to provide the information,
but that seems to weigh against holding the defendants responsible for money
that cannot be proven to have been lost. That is, if the bank received the
money, either from the borrower or by selling the property, it was not an actual
loss. To suggest that the down payments actually made (even if the source was
fraudulently stated) were “intended loss” equally makes no sense.
The PSRs’ recommendations appeared to deviate from the traditional
net-loss calculation because the buyers—not just the banks—suffered financial
harm. To be sure, loss calculations may properly include losses to the buyers
and are not limited to losses by financial institutions. This follows from the
Sentencing Guidelines’ definition of a victim, which can be any person who
suffered actual loss. U.S.S.G. § 2B1.1 app. 1; see also United States v. Hoffman-
Vaile, 568 F.3d 1335, 1343–44 (11th Cir. 2009) (affirming a loss calculation
that included losses to private insurers and patients after a defendant was
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convicted of defrauding Medicare). Calculating the losses sustained by the
buyers may require some estimation, which is permissible. See Morrison, 713
F.3d at 279.
However, the sum of the down payments was not a reasonable way to
estimate the loss. The down payments did not come from the buyers’ assets
and thus could not have been lost by the buyers. The down payments were
paid to the banks, so they were not lost by the banks either. For these reasons,
we hold that the loss calculation must have a closer nexus to the actual or
intended loss. We therefore conclude that the district court erred in its
application of the Sentencing Guidelines.
The Government argues that any error was harmless because using the
methodology advocated by the Duruisseaus as applied by the district court
would result in a number within the same monetary range as that found by
the district court, thus failing to alter the Guidelines calculations. To sustain
a claim of harmless error, the Government must show that the same sentence
would have been imposed absent the error, using one of the methodologies
described in United States v. Richardson, 676 F.3d 491, 511 (5th Cir. 2012).
However, the district court did not analyze the actual loss along the lines
described above. It is not clear, therefore, that the loss amount will remain
within the same guidelines range when loss is recalculated in a way consistent
with this opinion. We vacate the sentences and remand for resentencing. 4
Although we are remanding for resentencing, we disagree with the other
contention Lee made to the effect that district court impermissibly included
non-criminal conduct in the loss calculation, specifically because the
calculation included transactions that could not sustain a bank-fraud
4 Because we are remanding for resentencing, we note that the amount attributable
to Count Four should not be included in the loss amount. For real property, actual loss is
typically the best way to calculate loss, and Southern Heritage did not suffer loss.
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conviction as the Government had failed to establish that the lenders were
FDIC-insured. Uncharged conduct and facts underlying acquitted charges can
be “‘relevant conduct’ and thus may be used in determining loss amount if it is
part of the ‘same course of conduct’ or ‘a common scheme or plan’ as the offense
of conviction,” so long as the district court determines that the conduct has
been proven by a preponderance of the evidence. United States v. Cooks, 589
F.3d 173, 185 (5th Cir. 2009) (quoting U.S.S.G. § 1B1.3 cmt. 9); see also United
States v. Valdez, 453 F.3d 252, 264 (5th Cir. 2006) (discussing a sentencing
judge’s consideration of conduct underlying an acquitted charge). Here, the
district court considered transactions that were part of a common scheme or
plan to obtain loans in other buyers’ names using fraudulent HUD-1s.
Moreover, the district court set aside Appellants’ Count Three convictions
because the Government’s evidence at trial showed that Wachovia Bank was
FDIC insured, but the indictment alleged fraud of Wachovia Mortgage
Corporation. The Government failed to show that the Bank’s coverage
extended to the Mortgage Corporation, which created an “evidentiary chasm.”
However, the issue was one of proof, and nothing suggests that Appellants’
statements made to Wachovia would not have been within the ambit of the
federal bank-fraud statute if properly proved. The district court acted
reasonably when it included the relevant conduct in the loss calculation.
III. Conclusion
For the foregoing reasons, Appellants’ convictions are AFFIRMED.
Because we determine that the district court’s loss calculation method was an
impermissible application of the Sentencing Guidelines, we VACATE the
sentences and REMAND for resentencing consistent with this opinion.
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